Public Bill Committee

[Mr. Joe Benton in the Chair]

Clause 4

Procedure on receipt of proposals

Question proposed [this day], That the clause stand part of the Bill.

Question again proposed.

Phil Woolas: Thank you, Mr. Benton. At the end of this morning’s sitting, I was referring to the timetable for consultation with the public and saying how the Government’s position under the Bill is that it is up to local councils to determine how they will ascertain the broad support from the public that is one of the criteria asked for in the invitation to bid.

Alistair Burt: The Minister has made much of the fact that some authorities may have been thinking about the process for up to two years, and thus have had plenty of time to consult the public and give a sense of broad-based consent and so on. What about the situation that is not uncommon in some authorities that have submitted bids? Their bids have been brought forward at a late stage because of a bid made by another authority.
A borough that is thinking of going unitary may have done a lot of work and spoken to people within its area, but one of the knock-on consequences of the Bedford borough bid, for example, put a question mark over what would happen to the rest of the area. That prompted a response from Mid Beds and South Bedfordshire district councils that they could not reasonably have been expected to plan or pay for by way of preparation until they knew what Bedford borough would do. What about the time for public consultation in districts that have been placed in such a position?

Phil Woolas: For the benefit of the Committee, it may be worth noting that the bids or the proposals that have been made are all public documents. It is incumbent on us to put all the material on the website and publish it for the House.
The point of the hon. Member for North-East Bedfordshire was well made. An authority has to show that there is broad public support for its proposal. He asked whether there was enough time for an affected district or authority to respond and show that it has public support. The Government will judge such proposals across the whole of the affected area, not  only within the area that is proposed. It will be incumbent on the proposing authority, as well as the responding authority, to show the size of public support. That is a fair point because it reflects the top-down approach.
There is a balance between having a window of opportunity that is adequate for due consideration and a period that would be destabilising in the extreme for local authorities. I reassure the hon. Gentleman that public support for the proposal—both from the authority that is putting it in and the affected authorities—is a criterion that we shall use.

Patrick Hall: As for the pre-invitation to bid process or the period to which the hon. Member for North-East Bedfordshire alluded, Bedford borough asked its citizens panel. However, I do not regard that as constituting a sufficient measure of public interest, although it has demonstratedpublic support for the idea of a Bedford unitary. Surely the most important opportunity to go to town on demonstrating widespread public support from residents, businesses and voluntary organisations would occur after a bid has passed the initial hurdle, if indeed it does. I would expect councils to take such action in April, May and June, whether or not they were preparing beforehand, as the hon. Gentleman said. That is when the work needs to be done and when the real demonstration of public support will have to be obtained.

Phil Woolas: To emphasise the criteria, I must explain that the period until 25 January past was, of course, the deadline for the submission of proposals. We intend that, by the end of March, those proposals will be subject to judgment against the criteria established. Then the wider interests will be consulted, including affected authorities. That period of consultation will include local elections in those areas.

Alistair Burt: We are at a difficult point, and I return to the difficulty of the time scale. The hon. Member for Bedford made his point well, but surely the period in which a bidding authority had to show some degree of public support was the period up to the submission of the bid. That is one of the criteria. My point is that some bidding authorities had very little time to put their bid together. They will have spent serious money on getting the bid together at a late stage, because it would have been prompted by a proposal by a neighbouring authority. That means that trying to gauge public consent or support will be practically impossible.
Councils have had to go on a wing and a prayer. They have spent money and put in their bids because they think that that is the best defence mechanism against the other proposals on the table. I do not think that the time scale has been adequate to demonstrate any serious public consultation, notwithstanding that the process will consider that from now on. If the Minister finds that there is no public support or backing, authorities will have spent money putting together a bid unnecessarily.

Phil Woolas: The hon. Gentleman makes his point fairly, but the second period of consultation does not exclude the authorities from putting in their point of view, developing on proposals that might have been made or—

Alistair Burt: But it was a criterion in the first place.

Phil Woolas: The hon. Gentleman says that it is possible that an authority might have got wind of a neighbouring authority’s bid and then had a short period in which to prepare its proposals. I acknowledge that point, but it would be a strong point only if that authority were then excluded from further consultation. For the record, it might be worth referring the Committee to paragraph 5.10 of the invitation to councils in England to bid. It says:
“At stage 2, the Government will consult widely with partners/stakeholders in the areas affected by the proposals. Partners/stakeholders will thus have an opportunity to make representations about proposals that potentially will affect them. For these purposes, partners/stakeholders include all local authorities, the wider public sector...business community, voluntary and community sector. It is intended that this consultation would be launched at the end of March with a 12-week consultation period.”
Those interested groups include the affected councils. He has pressed his point quite well, and I acknowledge that.

Alistair Burt: On a final point, if that wider consultation in March shows that there was in fact no public support for a proposal, what the council has done, in extremis, is to spend a lot of council tax payers’ money to put together an unnecessary bid. The criterion that the proposals should be
“supported by a broad cross section of partners and stakeholders”
could not have been tested in the time required. Provided that the Minister is prepared to concede that money may well have been wasted in the process because of the urgency of the timetable, I take his point.

Phil Woolas: The hon. Gentleman is tempting me to say that devolution might mean spending money. I argue that inviting councils to put forward proposals for improving their local services and financial efficiency could be money well spent, but I am determined to remain neutral.

Patrick Hall: Let me point out that the complaint of the hon. Member for North-East Bedfordshire is that some councils might not have had time to spend enough money consulting a vast number of people, so they will have spent less.

Phil Woolas: My hon. Friend’s logic is normally impeccable. I was going to say “always”, but he might put amendments down, and then I would be in a difficulty. I am not sure what the local paper in Bedford and Bedfordshire is called, although I am sure that I will find out at some point in the next 12 weeks. I will resist the temptation to rename the Bill, “The Local Government and Public Involvement in Health in Bedfordshire Bill”, but his point was well made.
Clause 4 is much narrower in scope than people reading a report of the debate might believe. It sets out the procedure that the Secretary of State is to followon receipt of a proposal, and I commend it to the Committee.

Philip Dunne: I apologise to you, Mr. Benton, and to the Committee because this is the first sitting that I have attended—I had other commitments to fulfil.
I wish to ask the Minister a couple of questions for clarification, particularly on clause 4(2)(b), and to press him a little further on the issue of the extent of public consultation. Authorities that cover an area in which a proposal was made before 25 January, and which anticipated for some months in advance of the publication of the White Paper that such a proposal might be forthcoming, have had an opportunity to organise widespread public consultation. That is true in the case of Shropshire, as the Minister knows well, where three out of five districts have done so. The consultations took the form of a public ballot, which was well responded to, with a turnout of more than41 per cent. More than 60,000 people took the trouble to respond to a postal ballot. That response will, I hope, be taken into due consideration by the Minister.
The thrust of my question is that clause 4(2) states that
“the Secretary of State must consult the following about the proposal...
(b) any other person he believes to have an interest.”
Will the Minister confirm that the definition contained in clause 4(2)(b) would mean that the Secretary of State will be obliged to take into due consideration the results of a public ballot?

Phil Woolas: The hon. Gentleman makes a point about the extent of consultation. Clause 4(2)(b) says that “any other person” the Secretary of State believes to have an interest must be consulted. Government policy is that it is up to councils to determine how they consult on, or show a broad range of support for, a proposal. Clearly, members of the public are included within the definition of clause 4(2)(b). The Secretary of State would then have to balance the various competing claims, and it would be up to the councils affected to demonstrate what public support for proposals there was. As is laid out in the invitation, that criterion is to be given due regard in the consideration.

Philip Dunne: May I take it from that helpful response that the Minister will not only rely on partners and stakeholders that have a particular understanding within local authorities, but other persons, such as members of the public and the electorate that the authorities are there to serve?

Phil Woolas: That is a fair point. One has to judge on the criteria. Given those, public support will be an important part of the considerations.

Question put and agreed to.

Clause 4 ordered to stand part of the Bill.

Clause 5

Boundary Committee for England’s powers

Question proposed, That the clause stand part of the Bill.

Robert Syms: We are about to discuss several interrelated clauses. It would help if the Minister would give an explanation of how he thinks the boundary committee will work under the Bill. We have heard that it will have two essential tasks, the first of which is to deal with the bids that have been submitted should the Secretary of State refer matters to it. The second is to deal with the boundaries of authorities, some of which will not be part of the initial process. Clearly the committee will deal with any further bids that come along.
On the issue of boundary committee referral, the provisions clearly state that there may be a referral by the Secretary of State, but will the Minister say when there would not be a referral to the boundary committee? Probably the only case that I can think of is that of a county becoming a unitary authority, with clear boundaries and clarity on governance and on the number of councillors.
The next provision says that guidance must be given. It would be helpful if the Department’s guidance were published before we reach the end of the Bill. I should also like to know whether the guidance will be general guidance for all situations, or guidance that is specific to a bid, such as if there is a cross-county issue or a particular conglomeration when the Secretary of State will require information on item X or item Y.
Essentially, are we saying that there will be broad-brush guidance, with certain issues that may need to be returned to, or will the guidance be specific to particular proposals? We could have a situation in which the Secretary of State made a referral, and said, “I am interested in this bid, but I want to know X, Y and Z.” She would then give guidance to the boundary committee specifically to research and consider those issues. There is not too much more that I want to mention, but I shall probably have further questions as we examine later clauses.

Phil Woolas: That was a helpful intervention in allowing me to provide clarification. The answer is that the guidance will be broad-brush.
The clause will apply when the boundary committee receives a request for advice on a proposal. The boundary committee may provide advice. When it does, it may also do one of three things. First, it may recommend that the Secretary of State should implement the received proposal, with or without modification. Secondly, it can recommend that the Secretary of State should not implement the proposal—full stop. Thirdly, it can make an alternative proposal to the Secretary of State.
If the committee makes an alternative proposal, that proposal must deal with the whole or part of the area that the submitting authority or authorities could have included in their original proposal to the Secretary of State. However, unlike proposals submitted by local authorities, the boundary committee’s alternative proposal does not have to follow existing county or district boundaries. So the alternative proposal procedure is the way for the boundary committee to recommend boundary change for the relevant area. I refer the Committee to page six of the explanatory memorandum, which explains the point.
Subsection (6) provides that an alternative proposal from the boundary committee may not cover an area that includes part or all of the City of London or the Temples. Had I not just clarified that point, the power would have existed—so I hope that Members are paying attention. Proposals additionally may not extend to Wales. That might be of wider interest.
The clause allows the boundary committee for England to provide advice to the Secretary of State, make recommendations on received proposals, and make alternative proposals. The Government will be able to refer proposals to the boundary committee only after Royal Assent—if the Bill is approved by the House. We can ask the boundary committee for advice on any matter relating to the proposal, including looking at the electoral arrangements for that proposal. Again, it is an extraordinarily devolutionary and permissive framework that we are trying to create. I hope the Committee will see fit to support the clause.

Question put and agreed to.

Clause 5 ordered to stand part of the Bill.

Clause 6

Boundary Committee’s procedure

Robert Syms: I beg to move amendment No. 19, in clause 6, page 5, line 17, leave out ‘four weeks’ and insert ‘three months’.
The amendment is part of a theme, namely the speed of the timetable, that has been developed throughout this Bill and may last some weeks. Under clause 6, the relevant period for consultation back to the boundary commission is defined as four weeks. The amendment would clearly make it 12 weeks, and three months and is designed to tease out why the timetable is so tight. At this stage, the Minister usually gets up and says that this follows the Conservative legislation of 1992. However, I would be interested to know why four weeks is specified and why a little more time cannot be left for people to make further representations.

Phil Woolas: I was hoping to be able to say that it follows the Conservative precedent in 1972. I will attempt to explain why we think the amendment is not necessary. Where the boundary committee is asked for advice on an alternative proposal for a single tier of local government, the procedure already provides for significant opportunities for interested parties to make their representations. Where the committee is minded to make an alternative proposal, it must first publish a draft of its proposal and must also ensure that those who have an interest are informed of the proposaland the deadline for making representations to the committee on that matter. The boundary committee must take account of those representations.
Where the boundary committee subsequently, as a result of that consultation, makes a proposal to the Secretary of State, we provide for a further opportunity for interested parties to make representations. The committee must inform anybody who previously made representations on a particular proposal that it has made a subsequent proposal to the Secretary of State. It must also inform those people that they have a further four weeks to make representations to the Secretary of State. That will be four weeks from the date, unless revised, set by the Secretary of State for advice from the committee. In essence, that means that Parliament has its boundary committee to consult and look at the proposals and the four further weeks is then another opportunity to comment on the proposal coming from the boundary committee.
Given that deep and broad consultation by the independent boundary committee, we believe that four weeks is an adequate period to comment on the proposals that arise from the consultation. A further extension of the period—I think that the hon. Member for Poole’s amendment refers to three months—would have no other purpose than to replicate the role of the boundary committee, which is, of course, independent. That would, I argue, be an inappropriate period of time. The reference to the Secretary of State’s time period is a further one on which to comment on the boundary committee’s proposals, having already had the substantial consultation by the boundary committee itself.

Robert Syms: Essentially what happens is that boundary committee publishes a proposal, there is normally an inquiry, it considers the inquiry, gives a month for people to come back with further comments and usually goes with whatever the inquiry has decided. Under this proposal, there does not seem to be any inquiry. That means that if the boundary committee makes a proposal, having carried out consultations, there are four weeks for people to respond to it. But what happens during that four-week consultation, or with the three months under our amendment, which would give people more time? Does the boundary committee have to consider that and add it to the representations from the Secretary of State, or does the Secretary of State have to consider those further representations when she gets the main boundary committee submission?

Phil Woolas: The Secretary of State is obliged to consider those representations, but the purpose of the procedure is that those would have been made prior to the ones from the boundary committee. I suspect that the hon. Gentleman is wary of the boundary committee making an alternative proposal outsidethe expected remit of the proposals that have been consulted on. The boundary committee, in its consultation period, has to pay regard to the representations that are made. The idea of the further four weeks is to give interested parties time to comment on the tidying up of loose ends in areas that may have not been foreseen by the boundary committee—the unintended consequences, rather than the substance, of the proposals that it is obliged to take into account in its consultation period.

Bob Neill: Mr. Benton, it is a pleasure to serve under your chairmanship in these more familiar surroundings.
I was interested in what the Minister said, because it seems to confirm my hon. Friend’s concern that there will not be public inquiries under this procedure. If that is so, it would be as well if that were spelled out specifically. Is that intended to be a departure from the norm, purely for the circumstances of this small tranche of changes, or does this presage a broader thought that the Government would in future not propose to use public inquiries if local authority boundaries are to be changed? What is the thinking behind that?

Phil Woolas: On the face of it, the hon. Gentleman makes a reasonable point, because there are not public inquiries in such instances. We are not taking about the sort of procedure that is undergone in relation to parliamentary changes, but about tweaking boundaries. Indeed, public inquiries do not take place in such circumstances, so we are not envisaging that that should change. This is an open and liberal—if I can use that word without too much criticism from behind me or in front of me—measure and a reassurance to local authorities. It will put into the legislative framework, if the House accepts it, a sensible framework to fit the proposed new arrangement that reflects the principles that are already in place.

Robert Syms: This has been a useful debate. Public inquiries after local government reorganisation have not been a feature in the past, but we have not had authorities making sometimes competitive bids, leading to a ripple effect, with one borough making a bid and another at the other end of the county making another to move things forward. As the Minister acknowledged earlier in respect of Bedfordshire and a number of other authorities, the multiple proposals will lead to a slight headache in respect of what one ends up with. I wonder whether it might be appropriate sometimes to put such matters to a public inquiry. My other concern is that the provision diminishes the work for barristers within our system, and that must be a concern for us all.
We have had a useful debate. I still think that the period should be slightly longer than four weeks. That would be better, given that there is not to be a public inquiry. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 6

Boundary Committee’s procedure

Question proposed, That the clause stand part of the Bill.

Robert Syms: I asked earlier whether guidance wouldbe published. Does the guidance need parliamentary approval under either the negative or affirmative procedure, or will the Department just publish it and put it on the website?

Phil Woolas: I anticipated, from my experience of the hon. Gentleman on previous Committees, that he would ask whether the guidance should be published before the Committee has debated the relevant clause. The guidance will be produced before the end of the proceedings of the Bill. It is not subject to either the negative or the affirmative procedure because it is guidance that backs up the clauses, but he will have sight of it.

Robert Syms: Thank you.

Question put and agreed to.

Clause 6 ordered to stand part of the Bill.

Clause 7

implementation of proposals by order

Question proposed, That the clause stand part of the Bill.

Alistair Burt: I am intrigued by subsection (1)(c), whereby the Secretary of State could,
“decide to take no action”.
That would be at the end of a process where the boundary committee’s views have been sought, consultation has taken place and the boundary committee has made its recommendations. Will the Minister enlighten us as to what in particular is likely to lead him to a decision not to respond to the consultation and to take no action? I would like him in the context of the clause to set out what may induce him to take no action.

Phil Woolas: The short answer to that is common sense. If I explain what the clause is trying to do, that may help the Committee.
The clause allows the Secretary of State to implement proposals for a single tier of local government, as the Committee is aware. Those may be the proposals received from local authorities, or alternative proposals made by the boundary committee. Proposals may be implemented as I said before with or without modification. That is to allow the Secretary of State to implement the proposals with changes—for example, following advice from the boundary commission she may wish to amend the boundary of the proposed area. Any order for structural change will be subject to the affirmative procedure, as we will debate under clause 173, if the hon. Member for Lichfield wishes to make a note. Any such order will therefore be subject to further scrutiny by the House.
If a proposal that the Secretary of State has decided to implement has not been submitted jointly by all the authorities affected by it, she may not implement it unless she has first consulted on the proposal as required by clause 4. If she has asked the boundary committee for advice by a certain date, she may implement a proposal or an alternative proposal submitted only once six weeks have passed from that date.
The clause also specifies that the Secretary of State may decide to take no action on a proposal, as the hon. Member for North-East Bedfordshire said. She may decide to do that where she considers that the case for a single tier of local government for a particular area has not been made. The clause therefore specifies that the Secretary of State “may” implement proposals that she receives for a single tier of local government. The provision to which the hon. Member for North-East Bedfordshire has drawn attention simply points out the face that the Secretary of State may decide that the case has not been made—that even though the alternative route has been used, the case is not there. I would have thought that he would welcome that option.

Alistair Burt: I thank the Minister for the clarification. I presume that the same will apply if the Secretary of State finds that there is not a broad measure of public support for a proposal?

Phil Woolas: Indeed. The proposal must pass all the criteria. This is not a cherry-picking exercise. One has to weigh up the strengths and weaknesses of the proposals, but proposals must pass the criteria. As I said in evidence to the Committee in Portcullis House, the value for money criterion is particularly important.

Robert Syms: We have so far had 26 proposals, of which the Government intend to run with eight, as I read somewhere—it might be fewer, or it might be more. However, as I understand the Government’s intention, they will go forward with a proportion, so inevitably, no further action will be taken on some. At that point, presumably, the proposals on which no action has been taken are dead—gone. What I mean is that the Government are not going to go forward with eight and have another eight later. When someone has worked everything out, spent the money and put the proposal together, it is either success or failure.

Phil Woolas: The hon. Gentleman, quite reasonably, is probing for an answer to that question. The suspicion of Opposition Members knows no bounds.
First, the figure of about eight proposals, as I said in evidence, comes from the fact that reorganisation to unitary carries up-front costs, and those costs can be met only from the reserves of or efficiency savings by the local authority concerned. In either instance, most obviously in the first—where the reserves are affected—that would have an effect on local government in its totality’s assets and therefore its borrowing capacity. The figure of about eight is a macro-figure to fit in with the Government’s wider economic policy.
Secondly, a proposal would be given the go-ahead only if it could show that there were cost savings to the council tax payer in the form of the council tax not being at a higher level than it currently is. That raises the thorny question, if it is a district moving into a county unitary or districts coming together, whether the lower or the higher council tax would apply. The answer is that it would be the lower council tax. An authority would have to show that it was able to keep those costs down, so whether or not eight turns out to be the correct figure, and whether or not consequential proposals in neighbouring areas, districts or, in one case, unitaries take place, one would have to take those wider costs into account. There is a wider financial judgment to be made, as well as the specific judgement on each of the proposals or consequential proposals.

Robert Syms: This is a slightly tangential point but, however one looks at it, additional work is going to have to be undertaken by the boundary committee, which I suspect is not a heavily funded organisation. Who is going to pay for that? When the boundary committee gets involved in the process of consultation or in questions of local governance in relation to the bids that go forward, there will be some cost. My central question is: will the Secretary of State pay? Will committee’s current budget cover it, or will the cost have to be recouped from the good taxpayers of Bedfordshire, Shropshire, or elsewhere?

Phil Woolas: I commend the hon. Gentleman on an ingenious question. The answer is that the boundary committee is funded by the taxpayer and would be charged with the duties of commenting on those proposals. Of course, in the real world of government, that is another reason why one has to take decisions efficiently. I do not suppose that the Conservative party’s leaflets in Bedfordshire—no, I must not comment on Bedfordshire. However, it is a fair question, and the answer is that the boundary committee would pay.
It might be helpful if I comment on the 26 proposals that have come forward in the present stage of the procedure. The Government’s initial view on which bids will proceed to stage 2 of the consultation will be based on assessment against the invitation criteria, including affordability, and will be announced in March. The invitation acknowledges that decisions on restructuring will be taken in the light of overall public expenditure, and the difficulty for any Government is that one has to set down that overall cost envelope. However, without knowing which proposals fulfil the criteria, it is not possible to say how many will proceed. I believe that that is evidence of the Government’s good faith and of our genuinely open attitude and devolutionary approach.
The invitation adds that if the number of proposals meeting the criteria exceeds overall affordability, the Government will prioritise proposals on the basis of a range of factors that include delivery of desired outcomes by the proposal—benefits in services and so on—as well as use of reserves and value for moneyand efficiency. Affordability is thereby locked in as a priority consideration should we have to choose between proposals.
I genuinely believe that the provision is a common-sense one and I commend it to the Committee.

Philip Dunne: Having helpfully outlined the aggregate affordability envelope, will the Minister help us further by saying how much it is? What is the value of the affordability envelope?

Phil Woolas: It is not possible to do that. The envelope relates to the overall local government borrowing requirement, which is influenced by a number of factors. The level of assets—of debts and credits at any one time—is affected by many criteria, so the answer depends on the extent of the call on reserves by the aggregate proposals. That will determine the number of proposals that could proceed.
That approach is the responsible one to take, and I am sure that the hon. Gentleman will support it given that he wants inflationary pressures to be kept down, not least in relation to local government.

Andrew Stunell: The Minister was initially positive in responding on the clause, but then he wandered off. He said that if a proposal fails, it fails—that is the end of it. That probably satisfied the hon. Member for North-East Bedfordshire, but the Minister then said some other things and I should like to test him on them. He said that certain members of the Opposition were unduly suspicious.

Phil Woolas: The Conservatives are.

Andrew Stunell: Well, both they and we are paid to be suspicious—that is our job and I make no bones about it. Our suspicion is born from the experience of being given assurances that are often not 100 per cent. robust. I hope that the Minister does not mind, therefore, if I push him further.
We know that 26 bids have been submitted. However, if we look carefully at the list, we know also that 10 of them are bound to fail because they conflict directly with others. Without prejudice to which ones are successful, we know that there are 16 places where things can happen, so we know that 10 bids will fail. The Minister is to some extent a prisoner of the public statements that have been made in the past 18 months by Ministers in his Department. Ministers initially suggested that unitary authorities were the total solution, but they gradually, and quite properly, stepped back from that and have taken a much more permissive and—as the Minister himself sought to claim—devolutionary approach. We welcome that.
At the same time, we continue to hear language outside the Committee about the absolute necessity of those areas that do not change to a unitary structure developing an enhanced two-tier structure. Clause 7 is the provision that gives cause for suspicion that the Minister, in implementing
“an alternative proposal from the Boundary Committee...with or without modification”,
might, in turning down a bid, say, “Yes, but we are going to impose other kinds of change on the way that you work and organise yourselves.” I want the Minister to say just how far those alternative proposals might go, how far the boundary committee might takethose proposals but the Minister will accept them,and how far that might leave a situation that is somewhere between the present circumstances and the circumstances following a bid, but much to the disadvantage of the local community.

Phil Woolas: I accept, of course, that it is the hon. Gentleman’s job to be suspicious. To tease out clarification, which local authorities can look at, is helpful. The situation with the 26 proposals does not contradict what Ministers have said in the period before the last election and since. There were a number of reports that credited Ministers with remarks that went further in terms of the Government’s desire to have more unitary councils. Indeed, some specialist press reports said that the whole of England would be covered by unitary arrangements. The Government have never said that. As we all know, there has been a strong debate inside local government itself as to what the desirable procedure is. Both those reports and that debate reflected the lobbying—if I can use that word—within local government. I remember one newspaper headline saying that we were going to abolish all the counties. In the same week, another newspaper covering local government said that we were going to abolish all the districts. I kept those two headlines on my desk for reference when journalists called up.

Michael Fabricant: Perhaps you are going to do both?

Phil Woolas: I can assure the hon. Member for Lichfield that we have no intention to do both. Once one has decided that a permissive approach is the right one, one does not control what those proposals will be. Political parties may have their views, which are then accepted or not by their supporters. I suppose I just have to accept that. However, by definition, that means the Government could not prescribe in advance how many, or what type of, proposals should come forward.
My right hon. Friend the Member for South Shields (David Miliband) went out of his way to explain to authorities during the discussions that that was why it was not logically possible to limit the size, either minimum or maximum, of population or geography that a successful proposal should be, which had been the case in previous reorganisations. Once one has accepted that there are different solutions for different areas—which might mean a large rural county area is treated differently from an urban area—one cannot prescribe the configuration. Therefore, the debate has rendered the Government a victim of their own permissiveness and genuine desire to be devolutionary.

Andrew Stunell: Again, that was eloquently put, but the Minister did not answer the question regarding clause 7, namely that when a bid is not accepted and the boundary committee brings forward some alterations or modifications, how far does the clause permit the Minister to impose on a geographical area a form of government that is neither in the bid nor the status quo, but suits the Minister?

Phil Woolas: I can only commend the hon. Gentleman for pushing the point. This clause and the previous one sets that out. An alternative proposal that the boundary committee makes can include only the whole or a part of the authority that put forward the proposal in the first place. The hon. Gentleman’s premise is that the boundary committee could put a Machiavellian Government bid in. It cannot. I understand why he is pushing that suspicion, but it could not be the case.
We debated earlier the timing, the geography andthe remit of the power to direct and I hope that I responded to that as clearly as possible. I am grateful to the hon. Gentleman for his statement about an elegant reply. I hope that he accepts its honesty, too.

Alistair Burt: We come back to our debate on whether or not it was possible within a geographical area for a solution to be devised by the Minister that was not one of the proposals put to him by any of the parties that had responded to the invitation. The clause seems to confirm that that is the case. By varying the order, the hon. Gentleman can produce an answer that no one had thought of previously because, in his mind, that is the most convenient and effective system for local government in respect of the proposals that have been put to him.

Phil Woolas: We are repeating our previous debate, which takes us directly to clause 2 and the requirement to direct. It is not intended that the power should give the Secretary of State the opportunity to put forward a bid that has not either been first proposed by a local authority or subsequently, following the direction, been put forward by a local authority as the best way forward for the area. The reason for that, as I said before, is that the Government cannot allow a situation whereby a solution for part of an area is not viable in another part of the county, as would happen in the case that we are discussing.
A Minister cannot impose his or her ideas anywhere. He can implement a modification of a proposal ifthe boundary committee were to be involved, or a modification of the proposal from the councils. As hon. Gentlemen are questioning such matters, a Minister could not put forward a proposal that did not have the support of the local authority in the area concerned. It is possible that neighbouring authorities would not have that ultimate proposal as their first choice. Were that not the case, we would be able to move forward on a consensus.

Question put and agreed to.

Clause 7 ordered to stand part of the Bill.

Clause 8

Review by Boundary Committee of local government area

Question proposed, That the clause stand part of the Bill.

Robert Syms: The clause deals with changes to boundaries. There have always been modest changes to local government boundaries, usually because of a growing housing estate, the sides of a road straddling a boundary, or a rural parish being added to a borough or a town simply because it made sense in respect of emptying the dustbins and other basic services. During debate on the Bill, the issue was raised occasionally of extending the boundaries of towns or cities from where they might have been drawn in mediaeval or Victorian times because the communities had expanded since then.
Clause 9 covers a number of constraints. Will the Minister set out in a little more detail how the process would operate? If Leicester wanted to expand into neighbouring boroughs, could it do so? Normally, the boundary committee would undertake a review of all local authority boundaries. I can understand a local authority asking the boundary committee to review a particular boundary issue, but the Bill states that the boundary committee may “on its own initiative” undertake an inquiry. I wonder what that means. Will the boundary committee go marauding round, trying to expand our cities and annex suburban communities? Am I making a more sinister interpretation of the Bill? I hope that the Minister can give an elegant reply on the subject.

Andrew Stunell: My comments are addressed first to subsection (2)(b), which refers to
“the need to reflect the identities and interests of local communities.”
That seems to me to be the heart of the proposal. I hope that the Minister will assert that that factor must be given due weight when boundary changes are considered. Certainly in my local authority, Stockport, there have been such changes between us and the Tameside authority and between us and the Derbyshire authority. Those were common-sense changes to boundaries that were no longer relevant. They were not particularly difficult or contentious changes; they made common sense and were at quite a low level.
However, in the context of the Bill, it is only right that we hear from the Minister that he does not see clauses 8, 9 and 10 as changing existing practice to any substantial degree. That brings me back to some of the remarks that he made in responding to a debate on clause 2, when he referred to this provision as though it somehow absolved him from dealing with the point about clause 2. We are now dealing with a completely different set of propositions, which is not directly connected, as far as one can tell, with the proposals in clause 2. I seek the Minister’s confirmation of that point and that the extent of the provision is not being taken beyond what one might call the common law practice of present procedures in terms of tidying things up. Clause 8(4) contains a list of four things that cannot be done, which is on the whole very encouraging. Perhaps the Minister would like to underline again the fact that there is no intention to stretch current practice in the direction that the Opposition are concerned about.

Tom Levitt: I rise to make a brief contribution, having read clause 8 in some depth. I apologise to my hon. Friend the Minister for not giving him notice of this question, but he will appreciate why it might be particularly relevant to his constituency and mine. Do the words “local government” in the clause refer to national park boundaries, given that national parks are arms of local government? My hon. Friend and I both have an interest in the boundaries of a particular national park, because we have adjacent constituencies, albeit with no road passing over the boundary between us.

Bob Neill: My point follows on from those made by my hon. Friend the Member for Poole and the hon. Member for Hazel Grove. I would like some reassurance about the position of London boroughs because, unlike in the previous portion of the Bill, the definition of local authority and local government area in this portion—by virtue of clause 11, I think—includes London boroughs. I appreciate that it was not intended that they should form part of the unitary changes and the associated tinkerings, but I am interested to know for what purpose London boroughs are included in this portion of the Bill, other than perhaps for the occasional sensible adjustment where it is found that the odd piece of housing development strays over the boundary between two boroughs, as I said.
I do not want to be unduly suspicious but, asthe Minister knows, some people in London government—I am sure that such people are a great minority, even in the Labour party—would favour and have occasionally advocated wholesale change to the boundaries of the London boroughs. As the Minister knows, the Commission on London Governance, which we referred to earlier in our proceedings, completely and on a cross-party basis rejected any significant change of that kind. None of the boroughs wants it.
Can I have some reassurance that the measure will not be misused by someone not a million miles away from here at City hall to set in train a reorganisation of the London boroughs, which will make all that we have discussed in earlier clauses on unitary authority bids look minuscule by comparison? It is clear that the boroughs do not want such changes. The measure should be used simply to tidy up the odd borough anomaly that we see from time to time.

Philip Dunne: In common with Members on both sides of the Committee, I would like the Minister to clarify a point about the definition of local government areas in relation to city regions. The exclusions in subsection (4) suggest that it would be possible for a future Secretary of State to decide that he or she wished to introduce an additional tier of elected government using the city region device. Such a decision would not infringe any of the exemptions in subsection (4) because existing authorities could continue. I would appreciate clarification on whether that will be extended for city regions.

Phil Woolas: The point that the hon. Member for Hazel Grove made to try to get clarification has been validated by the three interventions that we just had.
Subsection (4) is designed to avoid the possibility of boundary changes effecting structural change by the back door. The procedures would be required in any event, irrespective of the invitation to propose changes. 
I shall answer some of the specific questions that have been raised. The measures do not include the national parks, which are covered by separate legislation. Of course, the authorities that have to be consulted on, or involved in, proposals could change. It may be helpful to my hon. Friend the Member for High Peak if I point out that the boundary committee has a duty to take account of national parks and areas of outstanding natural beauty when conducting its work. That is part of the definition contained in subsection (2)(b), which mentions
“the need to reflect the identities and interests of local communities”
and is part of our sustainable communities strategy, although, interestingly, it is in this and not the Sustainable Communities Bill, as I recall from my reading.
On the question raised about London, the answer is yes. The proposals laid out in the Bill would be required irrespective of clause 2, and are indeed about tidying up. The assurances are in clause 8(4) to help to clarify matters for the hon. Member for Bromley and Chislehurst and other members of the Committee.
On city regions, there is nothing in the Bill that allows for the idea of super-local authority areas. Again, the issue is not subject to the measure, which is about the common-sense tidying up of boundaries. A review can be instigated by a request from the Secretary of State, a local authority, or on the initiative of the boundary committee, which has the power to do so under existing procedures and legislation. It is part of its duty to consider such matters, and the hon. Member for Poole will agree that it has a good record ofdoing so.
Subsection (2) provides that the boundary committee may make only recommendations for boundary change that seem desirable to it,
“having regard to the need to secure effective and convenient local government”
under the 1972 definition, as we discussed earlier, and
“the need to reflect the identities and interests of local communities.”
That is very important. As elected representatives, we all know that the identity and interests of a local community cannot be determined in all cases by simple arithmetic. If the hon. Member for Isle of Wight (Mr. Turner), to whom I wish a speedy recovery from illness—I understand that he is doing well—were on the Committee, he would be the first to make the point that one would not want an administrative boundary for the Isle of Wight that was not the coastline—it would not make sense. I think that Banham did that. [Hon. Members: “Yes.”] It chopped the island in two. I rest my case.
The provision is consistent with the boundary committee’s current approach when undertaking boundary reviews. It may recommend a boundary change, the abolition of a local government area and/or the constitution of a new local government area. However, it cannot make recommendations for boundary change that would permit structural change through the back door. That is why the Bill provides that the boundary committee may not recommend the alteration of a boundary of a single-tier area or a London borough that would result in the abolition of a two-tier area—to look at the point about the edge, which I think that the London commission looked at—or the alteration of the boundary of a two-tier area that would result in the abolition of a single-tier area or a London borough. That refers to the point made about Heathrow airport in reverse.
Finally, the boundary committee may not alter the constitution of a new local government area that results in the abolition of an existing local government area, where the new area includes a combination of a single-tier area and a two-tier area. For example, the boundary committee could not recommend that the London borough of Harrow should be merged with Watford borough council. Furthermore, the boundary committee may not recommend the alteration of a local government area or the creation of a new local government area that would extend into Wales, the City of London or the Temples.

Robert Syms: The Minister ruled out the London borough of Harrow being merged with an area outside the Greater London boundary. However, my hon. Friend the Member for Bromley and Chislehurst would be concerned if Harrow were merged with Hillingdon or another borough.

Phil Woolas: The hon. Gentleman makes a slightly different point. It is possible for a proposal to be made to that effect. It is already possible for that proposal to be made. That is not affected by our restructuring proposals.

Robert Syms: So is it theoretically possible that the Mayor of London could request the boundary committee to review the boundaries of London boroughs to reduce the number of boroughs—even halve the number—under these proposals?

Phil Woolas: If the Mayor of London were to use that power, I suspect that he would want to create one London borough. The request for such a review—[Interruption.]

Joe Benton: Order. The background noise is getting a bit too high. I am trying to hear what the Minister is saying.

Phil Woolas: Such a request can come from the Secretary of State, a local authority or the boundary committee. What the hon. Gentleman is suggesting is not the case. A request could only come from a borough or boroughs, or from the Secretary of State or the boundary committee.

Bob Neill: May I take it, just for the sake of clarity, because it is important to my constituents, that that is because the definition of “local authority” in the definitions clause—clause 23—excludes the Mayor of London but includes London boroughs? My only fear is what happens if the Mayor of London nobbles the Secretary of State.

Phil Woolas: Hon. Members who took part in discussions on the original Greater London Authority Bill will remember that the point about whether the GLA is defined as a local authority for these purposes was debated at length. It is not. In some circumstances, such as capping, it is defined as a local authority.
Subsection (5) provides that the boundary committee must have regard to any guidance that the Secretary of State issues in connection with boundary review. That guidance may include, for example, clarification of the legislative powers of the boundary committee—what it can and cannot recommend—or relate to a specific proposal, to the economic coherence of the area or to transport patterns in the area.
Subsection (6) provides that a local authority must provide information to the boundary committee that it requests in connection with its role in undertaking a boundary review. That is to ensure that the boundary committee has all the information that it requires to make its recommendation to the Secretary of State. The clause provides for the independent boundary committee to review the administrative boundariesof principal authorities. For its common sense, I commend it to the Committee.

Question put and agreed to.

Clause 8 ordered to stand part of the Bill.

Clauses 9 and 10 ordered to stand part of the Bill.

Clause 11

Implementation orders: provision that may be included

Question proposed, That the clause stand part of the Bill.

Alistair Burt: I would like a brief run around the course on clause 11, which contains rather sweeping Government powers to deal with the implications of orders made and the ability to name new local government areas and authorities. That is where Kellyshire comes within the bounds of possibility, assuming some mental aberration on the part of the Secretary of State, which I am sure will not occur.
On the face of it, these are wide and sweeping opportunities. How on earth will the Minister exercise such extraordinary powers? I refer to subsections (3) and (4), which confer a whole series of powers. Subsection (4)(g) in particular refers to
“the boundary of any police area in England”.
We have just been through what must have been a bruising experience, even for the present Home Office, in dealing with the boundaries of police areas. Attempts were made to rearrange the police areas in fairly short order, and they all fell foul. How does the clause relate to the boundaries of police areas? There would be widespread concern if the creation of new local authorities under the Bill caused any disruption to existing police areas.

Michael Fabricant: Does my hon. Friend recall that we also asked for witnesses from the Association of Police Authorities? They could have given us interesting evidence.

Jonathan R Shaw: We could have had a whole busload of them.

Alistair Burt: You know, Mr. Benton, that could have been me talking. The hon. Gentleman took the words right out of my mouth. Had the witness procedure only been that little bit more extended, we could have thought ahead to these clauses and seen who might have been able to accompany Sir Michael Lyons to give us advice on them.
The boundary of a police area in England is mentioned specifically. What is the Minister’s consideration on that? There is a series of quite substantial powers, including powers over parish boundaries, the names of local government areas and the names of local authorities. He will be aware of the difficulties and debates that have raged throughout this country following any suggestion that traditional names should be changed or that local authorities should be named differently. Where is the indication that there will be public consultation and a degree of public consent to any changes made as a result of the powers in the clause?
I think that the Minister has got the drift of our concerns about this wide-ranging clause. If he could enlighten us to some degree, we might be able to come to a reasonable arrangement.

Philip Dunne: I rise to elaborate briefly on another provision to back up my hon. Friend’s point. Subsection (4)(e) refers to
“the establishment or membership of public bodies in any area affected”.
I draw the Minister’s attention to clause 23, where the definition of a public body includes
“a joint board, or joint committee, on which a local authority is represented”.
In many local authorities, representation by local councils extends to a vast array of bodies that would constitute public bodies under that definition. Many of them include bodies such as charities, in which a local authority is represented, housing associations and a host of other bodies that, by my reading of this definition, would be caught under the directive. It is not just a matter of the police authorities. The definition extends across the whole gamut of the public sector representation on bodies whether public, voluntary or private.

Phil Woolas: The answer to the hon. Gentlemen’s questions, both from the Front and Back Benches, is that the clause essentially translates the powers from the structural change process as laid out in the Local Government Act 1992. There is nothing new, therefore, in what is being proposed. What the clause relates to, which members of the Committee have picked up, is the definition of a local authority—whether it be police or parishes is laid out in the Bill.
The clause sets out the matters that the Secretary of State may include in an order implementing structural or boundary change. Those matters are necessary to achieve structural or boundary change and include, for example, the constitution of a new local government area, the abolition of an existing local government area, the winding up and dissolution of an existing local authority, the establishment of an authorityas a county council or as a district council, and consequential matters, such as the name of a local government area, electoral matters that are covered under clause 12 and the boundary of a parish.
As hon. Members have commented, subsection (5) defines the establishment of an authority, which also includes increasing the remit of an existing authority; for example, where a county council takes over the functions of a district council.
Subsection (6) makes it clear that the Secretaryof State’s power to implement a proposal with modifications includes the implementation of a proposal for an area with boundaries different from those proposed. The Secretary of State can implement a proposal for any area. She can change boundaries so that they do not run along existing county or district boundaries under the procedure, as we have said before. However, I would like to reassure the Committee that we intend to use that power only following advice from the independent boundary committee.
For example, if we received a proposal for a single tier of local government for an area and quite separately we received a recommendation from the boundary committee relating to the area but with an alternative boundary, the clause would enable us to implement the proposal but with the boundaryas recommended by the independent boundary committee. That is the extent of my permissive review, and I hope that members of the Committee will recognise that it is prudent to include that power in the clause.
Subsection (7), however, clarifies that the Secretary of State may not implement a proposal that extends an area into one that is not currently under local government control; for example, Wales, the City of London or the Temples. The clause is translating the powers that exist under the 1992 Act.
In answer to the question of the hon. Member for North-East Bedfordshire about police authorities and other such public bodies, the provision would allow a consequential change to a boundary—to, say, a police authority or parish—to follow from a local authority boundary. That is particularly important in combined police authority areas in which we would want public representation through the elected councillors—nominated by the principal local authorities—who sit on such bodies to ensure that there is coterminosity with the relevant public bodies that are listed in subsection (4). It would, therefore, be necessary to amend the membership of such a public body if changes such as those that I have outlined had taken place.
I hope that that answers the questions that have legitimately been asked regarding clause 11. The provisions are rooted in the 1992 Act. The clause specifies what the Secretary of State may include in an order that implements proposed structural or boundary changes. It is not our desire that we should be held responsible for the names of local council areas, which my experience shows is often more controversial than the extent of the boundary, the structure or anything else. I scratch my head at some of those matters just as much as other hon. Members. I assure the Committee that we would prefer to reach consensus on such a matter in the local area.

Question put and agreed to.

Clause 11 ordered to stand part of the Bill.

Clause 12

Provision relating to membership etc of authorities

Question proposed, That the clause stand part of the Bill.

Alistair Burt: Without going over the short debate that we have just had, given that this is an extensive provision will the Minister confirm that the aim of the clause is to restate the existing structures of any bodies that he will have rearranged through the reorganisation process that we have discussed? He is to have powers to deal with
“the total number of members of”
local authorities,
“the number of councillors to be returned”
and
“the name of any electoral area”.
Those are extensive and it would be interesting to hear how they are to be exercised. A number of areas may face a reduction in the number of councillors. How might that be handled?

Phil Woolas: The hon. Gentleman is right to raise that matter. It is slightly more extensive than the simple requirement to ensure proper change, because it covers the transitional period of change from one authority structure to another.
The clause defines the “electoral matters” in respect of the councillors, in clause 11(4)(c), including the total number of councillors of any local authority and
“the number of councillors to be returned”
in any particular ward, division or electoral area. It mentions appointing existing councillors as councillors to the new authorities for a transitional period until the first elections for those authorities are held. Obviously, they would be the councillors for that electoral area. The clause also makes provision for elections to the new authority, in case the Electoral Commission is not able to carry out a review and put in place electoral arrangements for the new authority before it is established. I do not believe that that has ever happened, but the clause could, hypothetically, do so. To be fair to the hon. Gentleman, the measure is slightly more extensive in that it covers the transitional period.

Alistair Burt: Will the Minister confirm that district and borough elections this year will take place in all those areas that currently have bids going forward and that no decision is anticipated as to whether it makes sense for them to take place? Will they definitely take place?

Phil Woolas: I am grateful for the opportunity to put this on the record once again. I recall being woken early one morning, last summer, to respond to a Conservative party press release that the BBC read at 6.30 in the morning. “Thanks,” was my response. Of course, under any circumstances, the elections will take place this year. It is a serious point—apart from being a point-scoring one—because in previous reviews there has been uncertainty about whether elections would be necessary or desirable and people were then saying, “What’s the point?” That is unfair to the public and particularly unfair to the people who may be standing. I am grateful to the hon. Gentleman for giving me the opportunity to explain that—and for reminding me of that summer morning.

Question put and agreed to.

Clause 12 ordered to stand part of the Bill.

Clauses 13 to 16 ordered to stand part of the Bill..

Clause 17

Residuary bodies

Question proposed, That the clause stand part of the Bill.

Robert Syms: There are a few items that I wish to raise. Clearly, much can go on with residuary bodies. Commitments can be entered into by local authorities for the long term. For all their benefits, private finance initiatives can sometimes land authorities with considerable costs in the long term, committing them to office buildings and other matters such as computer contracts. Will the Minister reassure us about how residuary bodies will operate and confirm that the consequence of reorganisation will be that the successor authority does not inherit more longer term, higher cost contracts than need be the case?
Under the clause, the residuary bodies will turn over most of the assets but, as we know, a lot of local government is tied up with ancient charities, gifts of land or school buildings which the authority is not sure whether it owns. Things might be vested into a charitable or residuary body for some years to come. I want reassurance from the Minister about how the process will operate. Will the costs of running residuary bodies dealing with the loose ends of reorganisation be taken into account for what was described earlier as the aggregate financial envelope?

Andrew Stunell: A lot of local government mythology is backed up by some pretty clear-cut anecdotes, if not evidence that could be put before a court, of circumstances in which councils going out of existence have left poisoned pills for their successors in one form or another. A notable case in my constituency goes back to 1973-74, so such cases can be enduring. With all the attention of the Minister and the Government on the performance of local authorities and their regulation, will he say something about how that will be prevented from happening in this round? What role will the residuary bodies play when dealing with it? What will happen to the finances of the new receiving authority if such an event takes place? The financial predictions on which the original decision was made could easily be blown out of the water. I should be interested to hear what the hon. Gentleman hasto say.

Phil Woolas: The hon. Gentleman has made an entirely fair and reasonable point about residuary bodies. Indeed, I remember representing an employee of a local authority that had been abolished under the previous process. He had been employed to count the number of oak trees in the area and had then been employed subsequently by the residuary body. It took some seven years to unwind the contract, during which time the number of trees had not changed. That is the stuff of employment tribunals.
Clause 24 deals with the contracts that local authorities may enter into during the period. A probing amendment has been tabled to the provision, which hopefully we shall debate. The clause under discussion enables the Secretary of State to establish one or more corporate bodies to take over property, rights, liabilities and the functions of those local authorities that cease to exist as a result of either structural or boundary changes. They are the residuary bodies to which the hon. Gentleman refers.
The use of residuary bodies is not, in fact, common. We do not expect that there will be a requirement for residuary bodies in this round of restructuring. However, it is prudent to allow a power to the Secretary of State to provide for them until the precise implementation arrangements for each new authority are known. I am sure that members of the Committee will wish to ask questions about such matters when we reach that stage in the Bill.
A residuary body could be used, for example, to take responsibility for any property, liabilities or functions not transferred to the new authorities because we do not expect that they will be required within the configuration. For example, following a reorganisation, if there is property surplus to the requirements of the new authority, it might be more appropriate to transfer it to a residuary body responsible for the property’s maintenance until it is disposed of. The residuary body would meet the costs out of its assets, and the net proceeds would be returned at the end of that period to the new authority. That approach was taken in the 1980s when the metropolitan counties were abolished. There were residuary assets, and the Committee can probably guess by now where the tree counter was employed.
Subsection (2) will allow the Secretary of State to make provision relating to a residuary body, including provision for its constitution, membership and power to borrow and lend money. It will also allow the Secretary of State to require such a body to submit to him or her a scheme for its own dissolution, because by definition residuary bodies are intended to have ashelf life.
Subsection (3) provides for the Secretary of State to transfer any property rights, liabilities or functions of a residuary body to any other body and provides for him or her to give effect to a scheme for the dissolution of that residuary body. Subsection (4) provides that the Secretary of State may make any incidental, consequential, transitional or supplementary provision, in particular those mentioned in clause 15, which relate to the modification and so on of an enactment.
The clause therefore provides for the Secretary of State to establish residuary bodies as the result of an order for structural and/or boundary change under clause 7 or 10, whichever contains the relevant procedure. That is the intention. As I said, it is not envisaged that that will be required under the window of opportunity, but it might come up through that route or through boundary changes resulting in structural change. I therefore think it sensible for the Committee to adopt the clause.

Question put and agreed to.

Clause 17 ordered to stand part of the Bill.

Clause 18

Staff commissions

Question proposed, That the clause stand part of the Bill.

Alistair Burt: I would be grateful for some clarification from the Minister on staff issues. Subsection (5) says in italics:
“Any expenses incurred by a staff commission under this section and not recovered from a relevant authority shall be paid by the Secretary of State out of money provided by Parliament.”
Can he give us any indication of where and when he expects that provision to be triggered? Is it an indication of concern that the costs of winding up an authority might not or should not be met by that authority, and that the money will therefore have to come from Parliament? If so, what provision has been made for it? What sums are anticipated? It would be appreciated if he said something about that.
I would also like clarification on how the staff commission would deal with some of the practical problems arising from reorganisation. It is a disorienting time. During the transition, some workers may choose to leave the authorities in transition and go to more settled neighbouring authorities, depriving the area of key skills. In all the areas on the fringe of London, it is easy to transfer to neighbouring areas, take skills elsewhere and not be caught up in transition. Would the measures involve the payment of bonuses to retain key staff during the transition? Might short-term contracts be involved to bring in specialised skills to cover the transition period? Who will meet the costs?
Where will pension costs lie under transition? Which authorities can be expected to make provision for them? It is likely that authorities with very different financial situations will be brought together. Some will have been prudent and have significant reserves, but others will have very few. That will affect the payment of costs and pensions and, ultimately, the amount of council tax being paid by taxpayers. Who is picking up the bill for the transitional process? I would be very grateful if the Minister could enlighten us on that matter. In particular, when does he expect the provisions in subsection (5) to be triggered?

Phil Woolas: I shall try and answer the hon. Gentleman’s questions, which once again are quite reasonable—they have been asked by trade unions, on behalf of employees, and by staff associations during this and previous rounds of consultation.
The employer of local authority employees is, of course, the relevant local authority and not the Government. The hon. Gentleman made the point about parliamentary accounts. Furthermore, on the 89 funds that make up the local government pension scheme, the local council or councils—they are combined for the purposes of the pension fund—are the employer. In that case, the Government are the regulator, given that it is a funded scheme. Of course, the points about potential redundancy pensions under such arrangements are very important indeed. It might be worth while for the Committee to note that the new regulations for the local government pension scheme are currently subject to consultation in a process that is coincidental to the proposal before the Committee.
The clause will try to deal, therefore, with transitionary periods and is similar to the proposal that has been put forward in previous reorganisations. I imagine that the new unitary authorities created through the process will want to take a fresh look at their management and staffing structures. Indeed, in large part, proposals for savings and efficiencies would probably look at staffing costs, given that those account for about 50 per cent. of local government’s total expenditure—80 per cent. if one includes the commissioned or contracted sector. Nevertheless, the Government obviously recognise that staff will be anxious about the restructuring and, therefore, we will be holding discussions with those involved in local government and groups such as the local government employers body and public sector trade unions in preparing for implementation—should any go ahead through the current window of opportunity.
The clause, therefore, allows the Secretary of State to establish one or more staff commissions to consider staffing arrangements, transfers and problems that might arise as a result of orders for structural or boundary changes—the two procedures that might lead to such situations. Staff commissions may also be established to advise the Secretary of State on the steps necessary to safeguard the interests of staff affected by such an order. That provision is broadly consistent with previous legislation. In the reorganisations of the 1990s, staff commissions were established with the remit to advise the Secretary of State on the transfer of staff and to ensure that transfer schemes established by local authorities complied with regulations made by the Secretary of State.
As I said, staff anxieties are high on our agenda. Subsection (2) provides that a staff
“commission can be established for the whole or any part of England.”
That will give us flexibility depending on the proposals that come forward and will allow the Secretary of State to establish a staff commission to consider matters relating to an individual area, or number of areas, depending on the circumstances. Subsection (3) provides that the Secretary of State may direct the
“staff commission with respect to their procedure.”
Subsection (4) will enable the Secretary of State to direct an authority or a residuary body, relating back to clause 17, to provide the information requested, implement any advice given by the staff commission, and to pay the staff commission any expenses it incurs as a result of work requested by the authority so, again, it is not a cost on the council tax payer. Under subsection (6), the Secretary of State may wind up a staff commission.
We do not anticipate that funding from central sources will be required, to address the question of the hon. Member for North-East Bedfordshire. However, as happens often in local government, a local authority could undertake functions and is responsible for pay and rations, as it were, even when the functions are undertaken on behalf of the wider community, the national Government or other agencies. Such instances are many and varied. Clause 18 gives the Secretary of State some flexibility to ensure that the burdens that rightfully fall on central Government are met by them and not by local government.
I am confident that the clause reflects previous practice and gives a wide flexibility for staffing arrangements. However, I emphasise that the specific concerns of individual local authorities and the public sector unions will be subject to discussion between those bodies as the measure is rolled out.

Question put and agreed to.

Clause 18 ordered to stand part of the Bill.

Clauses 19 to 23 ordered to stand part of the Bill.

Clause 24

Control of disposals etc

Robert Syms: I beg to move amendment No. 52, in clause 24, page 15, line 28, at end insert—
‘(5) Nothing in this Chapter or in any direction from the Secretary of State shall restrict a relevant authority from utilising its financial reserves to reduce its budget requirement for council tax purposes’.
This is a very good amendment. We have started to test some of the propositions to do with the financial implications of dealing with the winding up and merging of authorities. I have a few general questions on the matter, and I tabled the amendment because I am sure that the Minister has a very good explanation to offer to the Committee.
Some authorities will have large reserves, and some will have small reserves. There is an argument that large reserves are inefficient because they result from overtaxing people. My hon. Friend the Member for Shrewsbury and Atcham (Daniel Kawczynski) told the House about the reserves of the authority in his area on Second Reading. What will be the practice when an authority with large reserves comes together with an authority with small reserves? Will a number be put together by simple aggregate? Will an attempt be made to return what some might argue to be the proceeds of overtaxing to the people whose council holds large reserves? There are other issues: some authorities have large insurance funds, others may not. In other words, there will be financial imbalances when two authorities meet. How does one deal with those imbalances?
The Minister did not have the opportunity the other day—one talks about staffing—to address the single status issue, which some authorities have dealt with more speedily than others. If two authorities are put together, that will lead to financial imbalances. Under clause 24, we are trying to find out how we will proceed in dealing with financial imbalances between authorities. Will it just be a case of hard luck? An area comes together, everything is aggregated and, as the Minister said, people go for the lowest common denominator in terms of council tax.
Amendment No. 52 is concerned about financially irresponsible authorities doing what I suggested a moment ago. We were thinking of a situation in which an authority has reserves and just returns the money in the last year before it is merged with another authority. That is why we tabled the amendment, which states:
“Nothing in this Chapter or in any direction from the Secretary of State shall restrict a relevant authority from utilising its financial reserves to reduce its budget requirement for council tax purposes.”
That would deal with the Shrewsbury issue. It would allow Shrewsbury simply to give the money back, if it wished to do that, before it was merged against its will with another authority.
We have discussed staff imbalances. We want the Government to say what happens with financial imbalances. As part of the overall submission, have authorities to discuss how they will deal with such imbalances in arriving at the new arrangements with the consent of the people?

Andrew Stunell: I want to take the point made by the hon. Member for Poole a step further. As I understand it, one of the criteria that the Secretary of State will have in mind is the council tax levels that will arise in the combined authority. I think that I heard the Minister say that the Government would expect that not to exceed the lower of the levels that might be in force in the eight or more unitary authorities. Perhaps he could underline that or not, as the case may be. It is clearly relevant to the disposal of any reserves that might be held by one or other of the authorities. It might well be that, to achieve what has been described, the reserves held by one authority would of necessity be applied to reduce the charges in another authority or what was previously another authority area.
I may not be expressing myself clearly, but I hope that the Minister can understand the points that I am making. Clearly, that could be an aggravating feature, if I can put it that way, of the circumstances that arose post merger. I would be interested and grateful if the Minister gave us a response to that as well as to the issues raised by the hon. Member for Poole.

Philip Dunne: I support the amendment moved by my hon. Friend the Member for Poole, which has my name attached to it. I would like to elaborate a little on the issue, as he was kind enough to refer to my neighbouring authority and it does illustrate the importance of the amendment and the difficulties posed by the clause as drafted.
As we all know, councils have assets of very variable amount and quality. That is not a criticism of any individual council administration. Those assets tend to have been built up, accumulated or spent over years, decades and, in some cases, probably even longer than that. That is a result of the practice and stewardship of successive councils and successive Government policies, so this is not a party political point at all; it is just a fact of life. Some councils are well run; some are not so well run. Some retain substantial assets deliberately for a rainy day, and those assets may be, as my hon. Friend said, large cash balances—for example, from the sale of housing stock where they have not as yet spent the receipts. I am sure that, had my hon. Friend the Member for Shrewsbury and Atcham been lucky enough to serve on the Committee, he would be making the point more forcefully in the case of Shrewsbury and Atcham than I could.

Phil Woolas: And probably at greater length.

Philip Dunne: I could not possibly comment on the Minister’s sedentary intervention, but I am sure that any contribution made by my hon. Friend would be an impressive one.
Other councils have land—indeed, Shrewsbury and Atcham borough council still has farms on its books. Some of the ceremonial assets that might be up for sale as a result of having a unitary authority might also have value.
Other councils have significant debts. If the Minister will bear with me, I shall illustrate that some councils in Shropshire have significant debts. The county council has substantial debts, which are in the hundreds of millions of pounds—they total at least £100 million.  That situation compares with the assets of the other councils. The debts might not be purely financial ones, because councils may have commitments and liabilities. 
Irresponsible administrations might enter into liabilities ahead of elections for party political advantage. Again, I do not regard that as a party political point, and I am sure that none of us approve of such an approach. I represent Ludlow, as I am sure the Minister knows. There is an interesting contrast within Shropshire between the financial circumstances of those who are proponents of unitary authorities and those councils that are opposed to unitary authorities. As I have mentioned, the county council, which is the primary advocate, has significant debts.
I should perhaps have declared at the outset that I still serve on South Shropshire district council, which is an advocate of having a unitary authority. It has sold its housing stock and has invested the proceeds, so its receipts have now been depleted to the point where it is operating at the minimum level of prudent reserves without entering into debt. In the past year or so, it has been spending its reserves to fund its priorities. It would be coming into a unitary authority with neither assets nor liabilities and would broadly be in balance. That contrasts with some of the councils that are opposed to having a unitary authority.
I have already referred to Shrewsbury and Atcham borough council, which has significant cash, although it has some commitments because of how it plans to spend that. One of its primary concerns about having a unitary authority is that those plans might be taken over by a different authority with different objectives and that much of the money instead of being spent in Shrewsbury will be spent elsewhere in the unitary authority area. That is one of the strongest reasonsfor concern about the proposals in the town of Shrewsbury.

Patrick Hall: Is the hon. Gentleman suggesting that a council that is not in favour of the situation into which it is getting bound might prefer to make a huge one-off reduction in council tax as a way of getting rid of reserves rather than to favour investment in the longer term, albeit in a wider area?

Philip Dunne: I am grateful for that intervention, because I shall go on to explain the ramifications of the different asset positions, if the Committee will bear with me.
As the hon. Gentleman rightly says, the amendment is concerned with the use of reserves for a potential annual council tax adjustment. I am not, for one moment, suggesting that substantial reserves should be used to wipe out the council tax bill so that residents can be told that they can have a free ride for a year. Such an approach would be irresponsible.
These decisions are critical at the margin. This illustrates the fundamental problem: different balances of assets will give rise to significant problems in determining how the assets will be deployed in a new authority. The individual councils that are responsible for the assets at present will not be responsible for them in the future, and nor will the residents, whose assets in the broadest sense have given rise to that capital account. They might not bear the benefit in the future. 
Bridgnorth district council is opposed to having a unitary authority. It retains its housing stock and therefore has a substantial capital asset, which is not cashable—it could not be used, as the hon. Gentleman suggests, to adjust council tax. It is an asset, and the council has decided not to cash it in at this point. In a future council environment, a decision on whether to release the value in the housing stock would be taken not by Bridgnorth residents, but by a unitary authority. That is another strong reason why residents in that district are concerned about the possibility of a unitary authority imposing the sale of council housing.
There are a number of areas in which I seek reassurance from the Minister. One is whether residents of an area could gain any comfort in relation to asset disposal upon change to unitary status. If the unitary authority decided to dispose of assets—for whatever purpose, whether reductions in council tax, as the amendment suggests, or other purposes—could reinvestment and deployment of those assets be ring-fenced to the relevant area?
In Shropshire, we have just decriminalised parking offences, and each town is introducing a residents parking scheme, which is having an impact on the revenues from the off-street car parks that are owned by the district councils. Revenues from off-street car parking charges—a locally derived source of income—are at present used to serve the district. If the districts were subsumed into a unitary authority, would those revenues be used to subsidise parking schemes elsewhere in the county? Such issues are very live to the debate in Shropshire. They come down to the question of who makes decision about assets as one makes the transition from one local authority to another.
On the issue of transition, I think that we all have some sympathy with the intent of clause 24, which I shall address, if I may, Mr. Benton, when we reach the clause stand part debate. Nevertheless, if the clause remains unfettered by the amendment that has sensibly been suggested by Opposition Members, there are a great many issues as to how the powers in the clause will be exercised. I hope that the amendment will be supported. If it is not, the Secretary of State’s power to direct will effectively emasculate the ability of councils that have reserves to use them—quite properly—for their local area.

Michael Fabricant: I am motivated to speak in the debate partly because I am so fed up with hearing about Shropshire and Bedfordshire. It is about time we heard about Lichfield.
I am far too young to recall the last substantial boundary changes in 1973. I am told, however, that there was a major fight, because there was a Lichfield urban council and a Lichfield rural council. My hon. Friend the Member for Ludlow mentioned ceremonial objects. If you were to visit Lichfield now, Mr. Benton, you would find, in the small museum in the St. Mary’s centre, a huge amount of gold and other ceremonial objects that came from Lichfield urban district council. Incidentally, whereas the House of Commons has a so-called gold Mace that is actually just silver gilt,and pretty cheap, Lichfield has two solid gold maces—one from King James, and one, I believe, from King Charles II.
That was a digression. As my hon. Friend the Member for Ludlow said, we must consider how assets will be distributed, but I want to make a point that has not been made so far. There may, just may, conceivably be a time when it is in an area’s interest to have a unitary authority—not in Shropshire, we know that, but in some other area, though I can hardly imagine it. 
I hope that the Minister can reassure people here. It would be very wrong if a local referendum were to say that we did not want a merger, because our assets—be they two gold maces in Lichfield or assets held in reserve—would be distributed among a whole series of spendthrift councils. A referendum could well end up with a nay vote, if the Minister cannot now with his golden tongue—if not golden mace—reassure the Committee that assets will not be distributed in a way that prevents the prudent council from benefiting from such a merger.

Alistair Burt: Before the Minister replies, could I nominate that as today’s champagne moment?

Phil Woolas: This is one of those occasions, Mr. Benton, when the brief from one’s officials is not adequate. Quite why we did not anticipate the intervention will be the subject of a discussion in the Department tomorrow morning. That the Lichfield mace would be an asset is perfectly obvious. [Hon. Members: “Maces.”] If the plural of mace is maces, I will accept the justice of that. Had I known about it, I would have had my beady eyes on it for reduction of council tax purposes. Now that I do, I may re-examine the direction order and look at what powers theremay be.
My difficulty is compounded by the fact that I can give the reassurances that the hon. Members for Lichfield and for Ludlow are seeking, but their amendment would not do what they say. I commend the hon. Gentlemen for the amendment, which raises an important point and is quite ingenious. However, it would allow the very bingeing of councils with reserves and assets which the hon. Gentlemen wished to avoid. I will accept it at face value, because it gives me the opportunity to explain the Government’s purpose. My third difficulty is that it may be more helpful to the Committee if I can just briefly explain the purpose of the clause and then refer to the amendment.
The clause allows the Secretary of State to make a direction requiring an authority that may be dissolved as a result of these procedures to obtain consent from herself or from such authority or person as she may specify before it can dispose of land over £100,000 in value, enter into contracts or include an amount of financial reserves when calculating its budget requirement for council tax purposes. I refer the Committee to pages 9 and 14 of the document “Invitations to councils in England” on making proposals for future unitary structures, where the policy on the treatment of assets is dealt with. The intention of the clause and the reason that I think it sensible to recognise the point of the amendment, but to resist it, is precisely to ensure that those authorities with reserves are not plundered in a circumstance where a unitary authority is to be created.
Paragraph 3(2), on affordability, states clearly that in each year of the new authority
“transitional costs incurred are to be financed through a combination of the following—...in year revenue savings arising as a result of restructuring;...other in year specified revenue savings that are additional to annual efficiencies...which local authorities are expected to make”—
in other words, Gershon efficiencies cannot be taken into account—and, crucially and thirdly,
“drawing on available revenue reserves, subject to ensuring that satisfactory amounts remain to meet unforeseen pressures or other potential calls on reserves.”
which means being prudent and having some money just in case. It goes on to say:
“Use of revenue reserves should be the final option considered, both because of the need to preserve a contingency to meet future pressures and because use of reserves adversely affects the fiscal aggregates in a given year, increasing spending but not receipts and so placing further pressure on the Government’s fiscal rules”.
The intention behind the amendment is to allow the use of reserves to reduce budget requirements for council tax purposes. It strikes at the point made by my hon. Friend the Member for Bedford and other hon. Members that the more prudent position is to safeguard in the medium and long term rather than in the short term.
I turn briefly to contracts, as opposed to reserves. Consent must be sought under the clause for any capital contract under which consideration exceeds£1 million or which includes a term allowing the consideration payable to be varied. That means that an authority may not enter without consent into a capital contract for less than £1 million if provision in the contract means that its price can go up. That will ensure that an authority cannot tie the hands of a future authority.

Andrew Gwynne: As I believe my hon. Friend the Minister is coming on to say, the opposite of using reserves is building up debts. That is where he has perhaps learned lessons from the past. It is no surprise that a number of municipal facilities date from between 1970 and 1974. Indeed, in my constituency the former Denton urban district council decided after almost 80 years to build the swimming pool that it had been campaigning for, knowing that it would never have to repay the money that it borrowed and that that would be a problem for the new Tameside metropolitan borough council. That decision might have been right for Denton but it was certainly wrong for the new council. Does my hon. Friend agree that the clause will set that situation right for the future?

Phil Woolas: That is a real example of exactly the sort of decision making that the Government are keen to avoid. We do not want to restrict local authorities’ freedom unreasonably, but we want to act in the long-term interests of the council tax payer.
The proposals on assets and contracts must be taken in the context of the requirement, highlighted by the hon. Member for Hazel Grove, that the council tax payer should not suffer as a result and should only benefit from the requirement to equalise to the lower level. The invitation proposals require authorities to  put forward figures and plans to do that. They may not therefore enter into a contract that is not a capital contract without consent if the consideration exceeds £100,000 and the contract would run beyond a date specified in the direction or if, under the terms of the contract, its period could be extended beyond that date. 
There are many examples from previous restructuring rounds of authorities that were to be dissolved acting irresponsibly in relation to assets, disposals and contracts. The clause is designed to ensure that that does not happen again and that old authorities do not dispose of valuable land, enter into long-term contracts or apply financial reserves above a specified limit to reduce council tax in the short term. Such actions could have a negative effect on the new authority.
Of course, the Secretary of State or other person specified in a direction may consent to the disposal, to the authority entering into a contract or to the use of reserves. The Secretary of State may specify that consent must be sought from the new authority if it has already been established, which would be appropriate as such decisions would affect the new authority. The assets and liabilities of the old authority will of course be transferred to the new, as has been the case in previous restructuring.

Andrew Stunell: I thank the Minister for what he is saying, which is helpful. Subsection (1) states:
“The Secretary of State may direct that, with effect from a date specified in the direction, a relevant authority may not”
and so on. Will he say something about the commensurate date? Will it be retrospective and how will he stop, let us say, contracts being let which might do all the things to which the hon. Member for Denton and Reddish drew our attention? Back in 1974, we had a case or two in my own constituency as well. I think that it was quite common. I would just be interested to know how the Minister is going to erect a fence that prevents that happening in quite the way he hopes.

Phil Woolas: The hon. Gentleman is right. That is what these clauses are designed to do. The Secretary of State’s power under the clause requires an authority that is going to be dissolved to obtain consent under the circumstances that I outlined. I hope that it is clear that this clause does not provide a draconian power. It is not designed, or does not seek, to remove the discretion of local authorities to spend a reasonable amount of reserves for the purposes of reducing their budget requirement for council tax or other purposes.
The hon. Gentleman will remember past debates about capping powers and the relationship between reserves and revenues. Those debates highlighted the various circumstances described by the hon. Member for Ludlow in which very similar councils and neighbouring councils had wildly different levels of reserves, often as a result of the sale of housing or land assets that had been inherited in a number of ways, or in some cases due, for example, to the ownership of ports and harbours.
Before I answer the hon. Gentleman’s question, I will say that the amendment would mean that those reserves that would otherwise have been available to the new authority would no longer be available. It would  artificially, as it were, lower the council tax level in that area for a short period which would make it harder, if not impossible, for the new authority to equalise the council tax level across the new area as a whole. Those actions could undermine a new authority’s financial position in terms of both the cost of restructuring and its future consideration of equalising services and service provision. Finally, and importantly, in a given year, an undue use of reserves places further pressure, not just on that council, but on the Government’s fiscal rules as it adversely affects the fiscal aggregate by increasing spending but not receipt.
The timing of that is important because authorities are no doubt debating these points as we speak. Such a direction can be given only following Royal Assent. In other words, it is quite rightly subject to the will of this House. However, contracts, on which such a direction can be made, can be taken into account from31 December 2006 and that is a reasonable point. Therefore, there is a time scale built in for contracts.
 I do not believe that I am being dictatorial in resisting this amendment. Neither do I believe that the clause is dictatorial. It is based on the common-sense experience that we have heard from Members on both sides of the Committee this evening. It is not dictatorial in restricting what local authorities can and cannot do with their reserves. It is about prudence and best value for the council tax payer in the areas affected in the medium and long term. I therefore ask the Committee to resist the amendment and to support the clause.

Robert Syms: I thank the Minister for that explanation. To be honest, we are all a bit schizophrenic about this issue depending on the balances that our own authorities have. Our amendment could be dubbed “the Shrewsbury amendment” given that one couldsee in those circumstances imbalances between neighbouring authorities, which might, I suspect, be one of the reasons that there would be less consent for and consensus on any kind of reorganisation of local government. People will look towards their pocket book, their baubles and various other things. Clearly, one has to look at efficient and effective local government, but there are going to be all sorts of imbalances and some of those will balance out. One authority may have more assets, another more cash and another a more efficient staffing structure; one hopes that they all balance out. I suspect that underpinning the whole process is, ultimately, the consent of the people in those areas, and that financial or other imbalances are more likely to lead to non-consent to merger. That is why Shrewsbury, Shropshire and other counties, start to come up.
Clearly, it would be irresponsible of one authority to use its reserves in one year, thus giving its successor authority difficulties. Nevertheless, there might be a degree of rough justice for an area that finds itself in a particular financial situation and, having been merged into a rather larger organisation, then finds that that is somewhat lost. However, given the Minister’s golden tongue, which we heard about earlier, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Question proposed,That the clause stand part of the Bill.

Philip Dunne: Having forewarned that I might like to speak during clause stand part, I would not want to disappoint the Minister.
I want to pick up on the word used by my hon. Friend the Member for Poole: “consent”. That gets to the heart of the difficulty with the clause that I alluded to earlier. Where an area has a disparate disposition of assets, with some councils that are relatively well off and some that are in debt, much the best way to avoid a sense of unfairness residing within the population is simply not to impose a unitary structure on those councils against their will—that is, for the Secretary of State not to impose such a structure against the will of the people as well expressed. The debate on that issue highlights that fact. The Minister himself made the point well in his earlier remarks that the Government do not intend to impose a structure unless there is a broad cross-section of support. It says that in the invitation to bid, and that is an appropriate way to proceed.
When the Minister considers all the issues arising from our debate, I hope that he will recognise that financial disparity is a critical one. It is particularly relevant for those areas where local authorities have not sold the housing stock. Bridgnorth district council, which, he may be surprised to hear, is run by a Conservative administration, decided only last year not to dispose of housing stock. Having consulted tenants it decided that that was the right thing to do for its area, when it might have been thought that the authority’s natural instinct would have been to realise the asset. That is not a party political point; it is about fairness and a sense of injustice, for if the local council housing were sold by a unitary authority and the funds spent to improve housing in some other part of the county, it would be regarded as a very unfortunate consequence of restructuring local government.

Bob Neill: I promise members that I will not be going into the history of what happened to the former Greater London Council’s civic regalia, or how I ended up in possession of Lady Dartmouth’s settee as leader of the fire authority. That must wait for another occasion, because only one champagne moment is permitted—even at 10 to 7 at night.
I have a genuine inquiry with which I hope the Minister can help. Under clause 24(2), a “relevant authority” for these purposes is a local authority that is, in effect, caught by either clause 7 or clause 10. Looking at clause 30, which is the definition clause for this part of the Bill, the definition of a “local authority” includes “a London borough council”. We know that clause 7, which deals with the unitary scenario, does not apply to London borough councils, but clause 10 does, yet the Minister told me earlier that clause 10 is simply for tidying up boundaries. Why, then, do we need to have reference to London boroughs in a passage envisaging the disposal of assets when a local authority is dissolved? If the Minister is right, that provision could surely be removed for these purposes.

Phil Woolas: The Committee will be pleased toknow that I will not comment on Shropshire or Shrewsbury—it would be wrong of me to do so. However, the Committee will be aware that different types of authorities have different types of assets and, because of historical circumstances, the assets can vary widely. The local authority in my own area recently sold a Lowry painting in which, it would argue, it had wisely invested some 40 or 50 years’ ago and which provided a good return on its investment. Others would argue that it was disposing of an asset that belonged to the people in order to keep council tax down. Those are the types of argument raised.
The county councils and upper-tier authorities are education authorities where reserves are held in schools and are now the asset of the school, not of the local authority. Similarly, with housing disposals, there can be different situations in different areas. I do not think it would be wise to stray down the path of Shropshire—

Alistair Burt: rose—

Phil Woolas: Although I think that the hon. Gentleman is going to tempt me.

Alistair Burt: I would simply tempt the hon. Gentleman back to Bury. Can he contemplate on the circumstances in which a Labour Government required a Labour authority to sell a Lowry painting to make ends meet?

Phil Woolas: I congratulate that Labour authority on its wise investment and good housekeeping. I am constantly amazed that the Opposition advocate irresponsible housekeeping and the wrong use of assets. I met with the leader of the council to discuss that individual proposal.

Alistair Burt: It should never have been allowed.

Phil Woolas: The hon. Gentleman says that the authority should never have been in that position, but if it had been up to the Opposition it would never had been allowed to buy the painting in the first place. However, that is a different story and L. S. Lowry is not mentioned in the Bill.
On a point that the hon. Member for Bromley and Chislehurst made regarding London, it is already possible, and will still be possible if the measure is effected, for a procedural boundary change between two authorities to result in the creation of a new authority. It would not be possible for the Mayor of London to do that under current legislation. That is why the provision is drafted as it is. There are no proposals in the Bill to encourage such circumstances and the boundary committee is independent. I hope that that clarifies the matter for the hon. Gentleman. Clause 7 and earlier clauses of the Bill on restructuring do not affect the situation in London in that regard. On the basis of that, I ask that the clause be agreed to.

Question put and agreed to.

Clause 24 ordered to stand part of the Bill.
 Further consideration adjourned.—[Jonathan Shaw.]

Adjourned accordingly at six minutes to Seven o’clock till Thursday 8 February at half-past Nine o’clock.